Monthly Archives: May 2016

Downward correction of oil is not far away. Forecast for the week on May 30 – June 3

Stock indices finished the week in the “green“. Part of the support it has provided growth in commodity markets, although there were personal factors. In particular, US benchmarks optimistic about the revision to increase GDP per 1st quarter, Despite the fact that it is fraught with the earlier rate increase. In fact, this was confirmed by Janet Yellen. The Fed chief noted that the economic situation continues to improve and, if the labor market continues to show growth, it will be possible to continue to gradually raise rates. At the end of the week Dow Jones rose by 2.16%. NASDAQ added 3.44%. The German DAX 30 rose by 3.98% largely due to the fall in the euro. Hong Kong’s HSI was also able to show growth of 2.1%.

Brent crude oil still managed to finish the week above $ 50.00, to close at 50.10 dollars per barrel. As a result, an increase of 2.68%. Precious metals finished the week with losses. A key factor of pressure were changed expectations on monetary policy the US Federal Reserve, supported by a sufficiently strong US statistics. Gold (XAU / USD) fell by 3.17%, noting a 3-month low. Silver (XAG / USD) fell by 1.83%.

Chart of the week:

Gold chart

Gold chart

The economic data of the last week:

  • Monday. Eurozone: May composite PMI 52,9 against the forecast of 53.2
  • Tuesday. US: April, the volume of home sales in the primary market of 16.6% vs. 2.0%
  • Wednesday. The Bank of Canada decided to leave rates unchanged at 0.5%
  • Thursday. United Kingdom: Q1 GDP 2.0% vs. 2.1%
  • Friday. US. Q1 GDP 0.8% vs. 0.9%, and a preliminary assessment of 0.5%

Forecast for the week on May 30 – June 3

Stock market

This week the market stock indices to be another test of strength. We are talking about the US labor market data. This will be the last report on this sector of the US economy in the run-up to the June meeting of the US Federal Reserve. Recent comments from Fed made it clear that the regulator may increase the rate already at a meeting in June or July. In this case, the probability of a July increase, according to data of the futures positions on the rate of 53.2%. If the number of new jobs created outside the agricultural economic sector exceeded the forecast at the level of 170 thousand, And hourly wages continue to rise, signaling a strengthening of inflation at this level, expectations of tightening are likely to worsen.

Moreover, the pace of US economic growth in the 1st quarter was revised up to 0.8% in annual terms by 0.5% according to preliminary estimates. Therefore, the market, at least, will be put on a fairly aggressive rhetoric by the Fed. In this situation, after the short-term growth, caused by expectations of improving the state of the US economy, US indices could come under pressure. Dow Jones (YM) can in this case may fall back to the level in the area of ​​4390.0 17530 NASDAQ (NQ). But even before the release of the key during the week attention is paid to the data on the index of business activity in the industrial sector, a similar report on the service sector, as well as data on employment in the private sector from the ADP, which are often seen as a preliminary indicator.

Commodity and raw market

Brent crude oil noted high at 50.95 last week, but failed to hold on achieved energy sources. At the same time, it is possible that in the coming week the oil will continue downward correction. A key event will be the OPEC meeting scheduled for June 2nd. It is unlikely that this summit will present any surprises. In the rhetoric of the representatives of a number of countries (Saudi Arabia, Iran), it becomes clear that they are not willing to lower quotas. On the contrary, in the current environment, the fight for market share intensifies. Consequently, about any decline in production, which could lead to an acceleration of the process of achieving a balance of demand and supply of energy to world markets, can be no question. Therefore, as soon as there will be such a negative, albeit expected, the results of the meeting, of Brent will be able to speed up the fall. The primary objective will be the level of 48.20 dollars per barrel, and in the case of its breakthrough will be glad to decrease to 47.00.

Next week will be published data on the index of business activity in the industrial sector of China. As is known, the Celestial Empire is one of the largest consumers of copper in the world. Record with March 2015 can not be fixed above the watershed of 50, indicating that the ongoing downturn in the industry. If the figures will signal a further slowdown in the industrial sector of China, Copper (HG) may be under pressure. The primary goal of the fall may be the level of 2.0660.

Currency market

Recently, the Australian dollar does not feel the best way. Active reduction Aussie started after the Reserve Bank of Australia lowered the rate. This week attention is paid to the data on the rate of national economic growth in the 1st quarter of 2016. It is expected that in annual terms, it will slow down to 2.7% from 3.0% previously. In general, even numbers in line with expectations may prove to market comments recall the last head of the Reserve Bank of Australia that the current inflation expectations allow the regulator to adhere to the soft attitude of monetary policy. Added to this is not the best state of the labor market, where job growth has been driven by an increase in the number of employees with part-time and get a chance to increase the rate cut already in one of the next meetings. If more and statistics from the US will not disappoint, then the breakout below 0,7160 AUD / USD pair has a chance to fall to the level of 0.7060 with a further target at 0.7000.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

When will the revaluation expectations for Fed rate? Forecast for the week on April 23 – April 27

Stock markets have experienced is not the simplest week. The more aggressive than expected, the tone of the minutes of the April meeting of the US Federal Reserve put pressure on the indices. However, the last time they were still able to recover. As a result, Dow Jones closed almost unchanged (-0.02%). NASDAQ rose by 0.93%. The German DAX 30 added symbolic 0.16% to close the previous week. The growth leaders again broke Japanese Nikkey (NKD), which added 2.04% to the weakening yen. Hong Kong’s HSI, was also able to show growth of 1.4%.

Reporting of Wal-Mart (WNT) pleased investors. Earnings per share rose above forecasts ($ 0.98 against the expected $ 0.88). Quarterly revenue of $ 114.99 billion (+ 0.9% y / y), with an average forecast of $ 112.68 billion. Against this backdrop, shares of WMT jumped 7.83%, noting a maximum of 70.07. Continue to keep a positive attitude and actions nVidia (NVDA). Quotes reached the level of 44.30. Thus, an increase of 8.15%.

USD / JPY noted three-week high, rising to the level of 110.58. The Australian dollar, as expected, came under pressure, however, the key driver did not minutes of the meeting of the Reserve Bank of Australia and the weaker labor market data. AUD / USD lost 0.62%.

Despite the fact that in the second half of the week Brent was receding from earlier highs, following five days of working energy source showed an increase of 1.9%. Precious metals, on the background of the increased interest in dollar finished the week with losses. Gold (XAU / USD) has fallen in price by 1.69%. Silver (XAG / USD) fell by 3.37%.

Chart of the week:

Wal-mart chart

Wal-mart chart

The economic data of the last week:

  • Monday. US March net long-term flows of the TIC $ 78.1 billion versus $ 36.5 billion forecast
  • Tuesday. US April consumer price index (CPI) 0,4% against the forecast of 0.3%
  • Wednesday. Minutes of the April FOMC meeting turned out to be more aggressive than expected. He reflected that the majority of participants considered probable rate hike in June
  • Thursday. UK: April retail sales of 1.3%, 4.3% vs. 0.5%, 2.5%
  • Friday. Canada: April CPI + 1.7% – in line with forecast

Forecast for the week on April 23 – April 27

Stock market

The message received by the market on the part of the April meeting of the US Federal Reserve report proved disappointing for stock assets. I recall that the US regulator sounded very aggressive. Against this background, according to a bet on futures positions, the market began to be put on a rate hike at the meeting in June, with a probability of 30%. In July, the possibility of tightening already estimated above 50%. But if we talk about the state of the US economy, the latest reports do not indicate its indisputable health. As we approach a pretty important meeting of the Committee, is very closely monitor incoming macroeconomic statistics.

Next week it will be a report on orders for durable goods and revised data on the growth rate of the US economy in Q1. According to preliminary estimates, GDP growth was only 0.5% in annual terms, which was a minimum of 2 years. If the second evaluation confirms these figures will be revised or a fall, market expectations can change quickly, because in such a case is unlikely in June, the Fed will be able to raise. The natural reaction of US indices could be growth. Dow Jones (YM) in this case, may return to the level of 17700 area with a further target at 17830. NASDAQ (NQ) will aim towards 4435.0. In addition to the above mentioned reports, and attention should be paid to data on business activity in the industrial sector and the service sector by Markit and data on the US housing market.

Commodity and raw market

London Brent crude oil crept very close to the level of 50.00, noting the high at 49.81. It is possible that the source of energy still try to test the psychologically important barrier. The fact is that at this stage a number of oil-producing countries faced difficulties. In Canada, forest fires have led to the evacuation of about 800 thousand. Employees, and therefore restrict production. In Nigeria, the oil infrastructure under attack fighters, which reduced production to a minimum of 22 years old.

Local conflicts and limited supplies from Libya. But until the fall offers acquires a trend, continue to wait confident the upward trend in oil is probably not worth it. And this can hinder the fact that Iran continues to increase production, closer to its goal of 4 million barrels per day. Thus, while a relatively high probability we can assume that when approaching the mark of 50.00 for Brent, can begin profit taking, which will put pressure on short-term energy source. Moreover, at the current stage it is not at hand and oil plays a fairly high dollar.

Currency market

On a fairly large block of European statistics will be published next week. Revised data on the index of business activity in the industrial and service sectors are unlikely to cause a resonance, if there is no strong deviations from the preliminary figures. But the final GDP data for Germany is still a certain noteworthy. If the report will be released at least 0.1% higher than the preliminary assessment, the pan-European currency may be supported. It may also be interested in data on business sentiment in Germany ZEW index of business optimism from the IFO. Growth rates will show an improvement the business community economic outlook of the country and indirectly confirm market expectations about the long period of inactivity on the part of the European Central Bank. Against this background, the EUR / USD may undertake attempt to return to the level of 1.1320. Above it worth the wait only in case of weak data from the US, which would negate the optimism of the dollar caused by the aggressive tone of the Fed‘s April report.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

Oil: when waiting for the correction. Forecast for the week on May 16 – May 20

Last week, stocks have not demonstrated the unique dynamics. Five days the majority completed with minor changes. Dow Jones and NASDAQ closed with a loss of 1.1% and 0.24%, respectively. Statistics during the week came out mixed, and comments from the US Federal Reserve were quite aggressive to the market again began to think about a possible rate increase control in June. The German DAX 30 fell 0.31%. Frustration caused quite weak data on the German economy growth rate (1.3% vs. 1.4% in annual terms). The leaders escaped Japanese Nikkey, which added 1.67% to the weakening yen. Outsider made Hong Kong’s HSI, lost 2.09%. The pressure exerted in part expectations that industrial production data from China reflect the slowdown in growth to 6.5% from 6.8% in March.

Publication of quarterly nVidia (NVDA) report allowed the shares to show impressive growth. Quotes jumped by 16.16%, reaching the level of 40.98 dollars. Earnings per share rose from $ 0.24 to $ 0.33, or by 37.5% in annual terms.

In the currency market, the US dollar was again in the display. The US currency was able to strengthen against most opponents. The strongest growth it showed against the yen and the Australian dollar. AUD / USD lost 1,33%, USD / JPY rose 1.24%.

Over the past week, Brent crude oil has strengthened by 5.7% against the background of optimistic forecasts, the IEA, supply problems in Nigeria and the reduction in US stocks according to the EIA. Precious metals finished the week with losses, which was mainly due to the strengthening of the dollar, in which they are denominated. Gold (XAU / USD) has fallen in price by 1.2%. Silver (XAG / USD) fell by 2.17%.

Chart of the week:

nvidia chart

nVidia chart

The economic data of the last week:

  • Monday. Germany March factory orders + 1.9% vs. + 0.7%
  • Tuesday. China April CPI + 2.3% vs. + 2.4%
  • Wednesday. Australia: May consumer confidence from Westpac 8,5% against -4.0% the previous month
  • Thursday. The Bank of England voted unanimously for a constant level of 0.5% rate, calling the British referendum main risk to the economy
  • Friday. US April retail sales + 1.3% vs. + 0.8%

Forecast for the week on May 16 – May 20

Stock market

Published on the last working day of the week data on the index of producer prices and retail sales were mixed, when viewed from the perspective of the US Federal Reserve monetary policy prospects. Inflation at the producer level was lower than expected, which is obviously not conducive to the growth of an early tightening expectations. Let’s see what Tuesday will show data on the consumer price index. Low inflationary pressures will only support the market in the opinion that the increase is not necessary to wait until the end of the year. But retail sales exceeded forecasts (1.3% m / m vs. 0.8% expected). And it shows the stability in the consumer sector. In light of the actions of the US Federal Reserve estimates in June will be very interesting protocol the April meeting.

Especially when you consider that the comments from the regulator recently sounded quite aggressively. Rosengren and George noted that the asset market can be inflated “bubble“, if they are tightened with the tightening. But here it is worth remembering the fact that previously Yellen said that if need be, the Fed may decide on negative rates. Therefore, the tone of the Protocol may shed light on a common position. Aggressive comments may put pressure on the US indices, aiming at their further fall. Dow Jones (YM) in this case may surpass 17530 and target the traffic to 17350. According to NASDAQ (NQ) purpose may be a level of 4195.00. From the point of view of the prospects for economic interest will cause the data on the real estate sector (construction started and the number of permits issued, sales of existing homes), data on industrial production.

Commodity and raw market

London Brent crude oil again failed to gain a foothold above the level of 48.00 dollars per barrel. And, most likely, will soon break above recent highs (48.27) can be expected. Brent for the new wave of growth will require significant catalysts. But over the coming weeks, most likely, nothing interesting happens. Even if the US commercial stocks continue to decline, as well as production volume (which has already fallen to 8.8 million barrels per day), this is unlikely to be enough oil has been able to develop an impressive upward momentum. Thus, any upward movement could become an occasion to profit, and hence falling energy carrier prices. Of course, there is such a factor as supply disruptions in Nigeria, where production fell to the lowest in 22 years. But it negate the news from Canada, where the oil-producing enterprises gradually resume work. Thus, it can be assumed with high probability that Brent did not break out of the range of 43.00 – 48.00 during the week.

Currency market

The coming week may again be troubled for AUD / USD. For publication planned some interesting reports. The first thing you should pay attention – Minutes of the last meeting of the Reserve Bank of Australia. Recall, the regulator it lowered the rate to 1.75%. If made in it assessment of the economic outlook will be rather pessimistic, the Aussie could come under pressure as fears intensify further easing of monetary policy. Recall that earlier published data on consumer inflation expectations showed a drop of 3.6% to 3.2%. In addition, data will be published on the labor market. Rising unemployment, coupled with signs of insufficiently rapid growth of wages (wage index will be published on Wednesday, May 18) for the pair may be an alarming signal for the Australian dollar. Since this factor was one of the bases of rate cut. In the case of negative statistics with AUD / USD may continue to decline with the primary purpose at the level of 0.7160.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

Oil may remain under pressure. Forecast for the week on May 9 – May 13

Trying stock index earlier in the week to develop upward correction fiasco and they resumed falling. Part of the reason became aggressive comments from the US Fed Lockhart and Uilms, which made it clear that permit a rate increase in June. Negative colors added and insufficiently strong statistics from China and the United States, which only heightened fears about the global economic outlook. But the closure of the indices nevertheless regained some of the losses. As a result, US Dow Jones and NASDAQ completed its practically unchanged, losing 0.17% and 0.07%, respectively. The German DAX 30 fell 1.82%. The American fell by 2.94%. The fall of 3.51% showed Hong Kong HSI.

On the currency market the week was marked by the strengthening dollar and weakening commodity currencies, came under further pressure on weak macroeconomic statistics. As a result, AUD / USD lost 3,16%, NZD / USD slipped by 2.09%. Pair USD / CAD showed growth of 2.82%. It is worth noting that the Canadian dollar suffered the negative impact from falling oil prices.

Over the past week, Brent crude oil fell by 4.69%, which is not surprising against the background of information on the growth of production in the OPEC countries. Quotes energy source down to the level of 45.30 at the close. Weak statistics from China, which is the largest consumer of copper in the world collapses red metal quotations by 5.5%. Precious metals, which earlier in the week updated highs since January last year developed a law-governed downward correction. Gold (XAU / USD) lost 0.36%. Silver (XAG / USD) fell by 2.02%.

Chart of the week:

Copper chart

Copper chart

The economic data of the last week:

  • Monday. US: April index of business activity in the manufacturing sector (ISM) 50,8 against the forecast of 51.8
  • Tuesday. Reserve Bank of Australia lowered the rate to 1.75% from 2.0% previously
  • Wednesday. US. April, the level of employment in the private sector from the ADP 156 thousand vs. 196 thousand.
  • Thursday. UK: April, the PMI index in the service sector 52.3 vs. 53.5
  • Friday. US. April, the number of new jobs created outside the agricultural economic sector 160 thousand vs. 200 thousand.

Forecast for the week on May 9 – May 13

Stock market

The report on the US labor market has left mixed impressions. On the one hand, it is not up to expectations reaching figures on the number of new jobs created (160 thousand. Vs. 200 thousand.). Thus, we can say that the state of the US economy is still not stable (remember even the US GDP growth in the first quarter at 0.5% – the lowest level in 2 years) and therefore the Fed less reason to hold another round of monetary tightening. However, the average hourly wage in annual terms increased by 2.5% compared to 2.3%, reflecting the rise in inflation at this level. And it’s still theoretically could push the Fed to raise rates in the near future. In light of the assessment of inflation expectations can be quite interesting data on producer price index, published on Friday.

The report is often viewed as a leading indicator of consumer price index. In the case of growth, the market may start to be put on the strengthening of cost pressures and the possibility of a rate hike. In addition, attention should be data on US retail sales. Even the figures in line with expectations may reinforce expectations of an early tightening. The first reaction of US indexes on Statistics can be strong growth as reinforce expectations of economic stabilization and, hence, give reason to expect growth in corporate profits. But later Dow Jones (YM) and NASDAQ (NQ) can turn around and begin to decline, fearing tougher stance of the Federal Reserve. Against this background, benchmarks can target the movement, respectively, to 4195.00 and 17350. In addition to statistics, it is not necessary to exclude from the field of view and comments from US regulator: Evans, Rosengren, George Williams. Their aggressive attitude will only increase the pressure on the indices.

Commodity and raw market

Brent crude oil remained under pressure throughout the week. Once the energy source is not able to gain a foothold above the level of 48.00, began an active profit-taking as the market has accumulated a sufficiently large number of long positions in crude oil, according to CFTC data. The fundamental backdrop has not changed radically. News of the production capacity of OPEC oil countries offset information about its incidence in the United States and fears of supply disruptions from Canada, where raging wildfires. And yet to say that the potential fall completely exhausted, perhaps prematurely.

Technically, Brent may fall to the level of 43.90 with the next target area at around 42.50. Update highs without new catalysts black gold is unlikely to succeed, but they will likely not appear until the June meeting of OPEC (although from this side to wait for surprises is not necessary). So while each new rise in the short-term may be accompanied by Closeouts. If we talk about interesting market reports oil, the next week will be published data on the global oil supply and demand in April. If the imbalance rise will be fixed, Brent could accelerate the fall.

Currency market

Last week, the British pound updated 4 months maximum was followed by the fall of almost 3.5 figure. Of course, this is not enough and pushed a strong statistics on the index of business activity in the industrial and construction sectors and services. This week the dynamics of the GBP / USD pair may lead to a decision of the Bank of England’s monetary policy. Almost no doubt about the fact that the regulator will keep it unchanged. However, particular interest will cause the balance of votes. If, among the representatives of the committee will be at least one supporter of easing monetary policy, pound it can have an impressive pressure. Especially because the British currency is still influenced by concerns about the effects of Brekzita. Negativity can add and quarterly inflation report, provided that inflation forecasts will be lowered. Taken together, these factors could send GBP / USD in the area of ​​the level 1.4300 with a further target at 1.4230.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.

BRENT CRUDE OIL: looking for sales opportunities

Fundamental grounds

Oil prices are under pressure as market participants expressed concern that the increase in the area of $ 50 a barrel was poorly justified fundamentally. Certain negative added data from Iraq, which again began to increase production in April. Net long positions on NYMEX at record high levels, which is also an indicator of socio-psychological overdue downward correction.

Today and tomorrow will be published important reports on stocks. First, the American Petroleum Institute (May 3, 19.30 GMT), and then from the Energy Information Agency (4 May, 15.30 GMT). If they will record growth, this may be an additional reason for the sales from the current relatively high price levels.

Technical grounds

Brent deviation from the 50-day moving average (SMA50) April 28 reached 18%. Historically in this area contracts often begin to be adjusted in the direction of the average, the value of which currently stands at 41.08. On Tuesday morning, May 3 price check on the strength of the 200-hour moving average (45.81), but the activity of buyers near this mark low. It forms a support in the area of 45.63. If she can not stand, it could signal the beginning of a protracted correction.

Brent crude oil chart

Brent crude oil chart

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.